Is Your Company Prepared for the Consumer Protection Act?

The Consumer Protection Act (CPA) which is due to come into effect on 31 March 2011 is complex legislation that will have an impact on everybody, holding serious ramifications for all individuals, companies and organisations that sell products or provide services.

The financial threshold that will for most of the CPA exclude companies from protection under the Act is currently proposed at R3-million either in turnover or in assets.

Ettiene Retief, a tax and corporate law specialist at FTR Tax and Corporate Administration, says all service providers, retailers, and generally all businesses, will have an obligation to apply the Act and to protect the rights of consumers. “Nevertheless, if providers of goods and services fail in their obligation to meet the terms of the Act, the legislation allows for a penalty of R1-million or 10% of annual turnover, whichever is the greater. The Act also requires that products for sale must be properly packaged with all required warnings, no false statements or empty promises and clearly priced, including the VAT portion.”

Complex & Detailed Act

The CPA is a very complex and very detailed Act, together with the pending regulations, and businesses of all sizes will have to ensure that they become familiar with the requirements that will affect their operations. To help SME businesses understand and cope with the provisions of the Act, Softline Pastel Accounting and Payroll software developers, is hosting a seminar at which Retief will provide a simplified overview in plain language and highlight the most important aspects in achieving compliance with the new law. “This Act has been promulgated and is therefore legislation; it just has not been applied as yet. Companies now have a four-month window in which to organise themselves, become familiar with it and implement the applicable sections,” said Retief. “Its complexity means that companies will have to devote time to clearly understand their obligations.”

The depth of the Act leaves no stone unturned. It deals with consumer rights over a broad perspective ranging from fixed term contracts, limited time periods, cancellation clauses, notice terms, penalty clauses, refunding of deposits and the right of persons to have a contract prepared in a language they can understand, among others. Retief says the Act stipulates the use of plain language for contracts with short concise sentences, no contradictions, explicit conditions and no “legalese”, even though this may initially be difficult to apply and control. “The objective is to ensure that the person the contract is intended for will be able to fully understand it. The default language is English but companies must be prepared to offer alternative languages that suit the demographics of the area or areas in which the company operates.”

To illustrate the depth of the CPA, Retief refers to some examples. When a person takes a car to a service organisation such as a panel beater for repairs, the panel beater must provide a written estimate. If that estimate changes at any time the customer must be immediately informed or the customer can insist on paying the initial price quoted if the amended estimate was not accepted. The estimate must be accepted prior to work being performed. “The Act describes very clearly the process of estimates when goods are taken for service or repair to the extent that any organisation that does not properly follow the cost estimate process, will be at great risk.” Retief adds that all goods and services must be priced including VAT when the supplier is a registered VAT vendor, in terms of the Value-Added Tax Act. Consumers must be able to identify the price for each product item especially in the retail environment. If two prices show on a single product, the lower price applies. If a consumer presents a product at the till and is told the price on the package is incorrect and the actual cost is higher, the price originally on the product will be paid.

Get Your Terms & Conditions in Order

The well-known “terms and conditions apply” that consumers regularly see on product promotions must be done in such a way that the consumer can review the terms and conditions before accepting or signing on the dotted-line. “This is indicative of the detail explored by the Act,” says Retief. “It is clearly telling retailers and other businesses that consumers must be fully informed so that they can make the best choice when purchasing goods on the basis of what you see is what you actually get, with no surprises.” The Act is also explicit regarding the return of faulty goods, obligation to repair, replace or provide a full refund. “The consumer’s right to choice and to quality, safe goods is strongly supported by the Act. The seller can no longer offer the buyer a credit note to buy something else. If the product packaging claims that a drill will go through 10mm thick steel and it does not, the buyer should be entitled to a full refund.”

“It is now the consumer who dictates what he wants, in terms of replacement or repair. If a supplier repairs and the product fails again within three months the Act requires the supplier to replace the goods or refund the full price paid.” Retief summarises by saying nothing escapes attention in the Act. Warranties, contracts, renewals, cancellations, use of trading names, marketing, advertising, consumer contact lists and many more have all come under the spotlight. “Companies have a lot of homework to do to ensure their compliance.”

CPA Seminars

The Softline Pastel Seminars team co-ordinates and hosts a number of quality seminars, in the Payroll, Accounting and HR industry, as well as non-financial related topics during the course of the year. For more information on Pastel seminars, click here.

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How to Take Risks That Win (Almost) Every Time

Looking 13,000 feet down out of an airplane, parachute pack secured, your heart beating in your throat, must be one of the most terrifying experiences imaginable. Though not all risks are life-threatening, all risks are frightening. As humans, we’re constantly afraid of failure, of doing something wrong and of having to deal with the consequences. Yet, at the same time, there is nothing more rewarding than reaping the benefits of a risk gone right – of landing safely ground, to build the earlier metaphor.

For entrepreneurs, risk taking is a necessity of the job. After all, we’re never quite positive that things are going to work out the way we envision. We make choices daily which affect our business, and we can never be absolutely sure that we’re making the right ones.

Knowing which risks to take, and how to take them, can be extremely helpful in stacking the odds in your favour. While risks are unavoidable, approaching them strategically can be the best way to decrease your parachute’s chances of failing, so to speak, and to produce measurable results that you would never have achieved had you avoided the risk in the first place.

1. Information is your friend

The more knowledge you have about any given topic, the less risky your endeavours will ultimately be. For example, many of the most steadily successful brokers on Wall Street are those who understand the patterns of the market better than anyone else. While there are always going to be those people who make millions off a risky uninformed bet, they are the same people who most likely will lose all their earnings on a single trade. Traders who build a sustainable career for themselves are the ones that have deep knowledge of the industry.

Similarly, you should be an expert in your field. You should know your industry well – your product or service you are providing. You should understand the buying patterns of consumers, their motivation and pain points. What drives them to buy your products? Where and when do they buy? What makes them stop buying?

As an entrepreneur – or in any profession that requires risks, really – you’ll want to have as much information as possible. The more you know, the fewer unknowns there are. The unknowns, ultimately, are what makes an action risky.

2. Assess the risk carefully

While risk is a reality of life, there is also something to be said for strong assessment skills. Being able to look at a risky situation and decide whether or not it’s worth taking is a hallmark of a good businessperson.

Venture capital investors, for example, spend their entire careers deciding which companies are worth risking time and money on. Those who throw their money around recklessly, while admirable for their risk-taking, are not necessarily the most successful investors.

Being a good risk-taker involves using the information you have to assess a situation and decide whether or not the risk is worth it.

3. Learn from failure

Appreciate that all risks are learning experiences. Especially those that don’t pan out.

On some accounts, failure is actually more valuable than success. While failures may not lead to an increase in your bottom line, you can use the opportunity to glean important information about what you’ve done wrong, where you misstepped and how you can move forward in the future.

The biggest mistake many people make is seeing failure as a measure of who they are, rather than a measure of where they can go. We’ve all heard that failure is feedback. Most successful entrepreneurs failed at many ventures before they created that million-dollar offering. Most overnight successes took many years to make. If you take a risk and fail, learn from it. Ask yourself what you can do differently next time, and then move on. The only failure is not learning the lesson that it provides and using it to hone your next endeavour.

According to Mark Zuckerberg, “The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

Taking risks is the only way to go from here to there. Even failed risks move you closer to your goals if you can turn that failure into valuable learning and a plan for improve your results next time.

Entrepreneurs live in the daily grind of their businesses. This is unavoidable but can often be fatal. Day to day we think that the little things matter more than the very big things do. A little thing like the floor of your office or store being mopped daily can become a huge issue if not done.

Sure, these things are important because they create a culture of care and pride, but what you might be missing while you watch your team mop the floors is the macro-economic climate shifts that happen more rapidly than you think.

Step back to move forward

Early in the life of a new business the only way to survive is for the founders to do absolutely everything. From designing a logo and launching a strategy all the way through to writing tweets and emailing customers when there are issues.

This makes sense when you’re building a business, your team is small and your cash is tight. However, as you grow, it becomes important to let your people do their best and take on the day to day work.

As an obsessive entrepreneur it’s often hard to let go of these little details. Day to day operations will always be integral to the growth of your business and an important part of someone’s job in your organisation. However, it shouldn’t be yours if you are taking care of the big picture.

As the leader of your business you need to take a step back from the grind and look at the world around you.

To truly understand the positioning of your growing business you need to understand your country, continent and world.

You should understand the economic position you’re in as well as that of your province, country and even the markets that might directly influence your sales. Get a good understanding of the political stability of your country and the world.

Finally, you should figure out if there are any large- scale impending disasters. If disaster is imminent, like Zuma pillaging a nation and tanking an economy, then you have to get your head out of the floor mopping and into the high-level strategy of survival and preparation for disaster.

Move the needle

Every day there are 24 hours that you can fill. You can choose to work during that time and faff with the things that were once important, or you can figure out what is going to move the needle in your business.

What is going to really help you survive and grow in the years to come? Founders, CEOs and leaders need to be thinking about the next three, five and ten years. Let your team worry about today. Let the smart people you work with make today and tomorrow and next week work.

Chances are, the things you are doing in the hours/minutes aren’t saving your business or moving the needle. It’s the things that you plan for the next six months that affect the next five years.

Don’t live in a bubble

It’s easy to fall into the trap of thinking that you live in an isolated country or region that isn’t affected by world events. Unfortunately, no matter how hard you close your eyes and hide your head under the pillow you can’t avoid the fact that your business exists in a globally connected environment.

At Nic Harry we were affected by the Brexit events that unfolded in the UK and Europe. British shoppers were scared and didn’t spend their money when they were on holiday in Cape Town over the peak holiday season. I was so busy preparing for the seasonal uptick that I missed the link between a huge global event and my sales.

You live in a world that is filled with online shoppers and tourists who visit your business whether you know it or not. Prepare for the world to start having an effect on your business more and more.

Broaden your view

I am always fascinated by the narrow view of the world many entrepreneurs display. I may sell men’s socks, accessories and style but that doesn’t mean that the mining sector doesn’t affect my business.

Even if you were an entrepreneur building a business in Antarctica I would urge you to read about oil prices, political world events and the intricacies of overfishing in the South American seas. Being well rounded and having a broad view of the world and your business can only make you a more robust thinker who sees more angles to exploit, protect against and thrive on.

Studies across the globe show that the minorities in all contexts have higher rates of entrepreneurial activity than the incumbent majority. There are a host of reasons for this, but one of them is that adversity creates resilience and self-reliance that are vital for entrepreneurial success.

Every successful and exponentially successful entrepreneur that I have met or read about has transitioned through a baptism of fire. They have overcome insurmountable obstacles and used the lessons gifted through their experiences to rocket their business to the next level.

The Five Gifts Of Adversity

A sense of where your true limits are. These are always far beyond what your belief system believed them to be. The experience of testing your limits breaks the preconceived notion of where your limits are or were.

Confidence. Once you have overcome an issue, the experience of overcoming it builds a high level of confidence that should the issue reoccur, you will have the ability and resources to overcome it. For example, if you lose your biggest client and manage to keep your business afloat, the next time you lose a big client you will not panic or become despondent, but will instead kick into action and claw your way out again.

Insight. Insight as to which of your non-financial resources you can tap into. When the chips are down and money is nowhere to be found, it’s amazing how many resources you will now perceive around you that can potentially help you transition to success. These resources come in the form of advice from friends, access to new markets through networks, credit from suppliers, and free promotion through networks, to name a few.

Your relationship with your own resourcefulness. The experience of not having resources but somehow manufacturing some out of thin air, recalibrates your sense of your own resourcefulness, which in turn builds a level of confidence that should you be dropped off in the middle of the desert with only a matchbox and a magnifying glass, you will survive.

Faith. A level of faith and a belief system that there is always a way to overcome a problem. This is true no matter how overwhelming the problem may be. The more you overcome impossible problems, the less you’ll believe in the existence of impossible problems.

So instead of worrying about who has privilege, who doesn’t, or what privilege actually is, use the lessons gifted to you when overcoming insurmountable obstacles to propel your business forward.